Flipkart funding to push discounts

While Flipkart, at the group level, aims to clock Rs 5,000-5,500 crore, including sales from Myntra and Jabong, Amazon is looking to beat the former's numbers on a stand-alone basis.Digbijay Mishra | TNN | August 14, 2017, 07:08 IST

BENGALURU: Consumers can look forward to a string of discounts this festive season as the top two e-commerce players get ready to loosen the purse strings in a bid to outdo each other over the next few months. After SoftBank's record-breaking $2.5 billion investment in Flipkart, the domestic online retailer and Amazon are set for their first major battle next month when their annual sales kick off.

While Flipkart, at the group level, aims to clock Rs 5,000-5,500 crore, including sales from Myntra and Jabong, Amazon is looking to beat the former's numbers on a stand-alone basis.

Amazon has been pushing aggressively in areas where it has to catch up with Flipkart like fashion and large appliances. The Jeff Bezos-led tech behemoth, throughout last year, pumped capital into its India business with its annual spends surpassing $1billion in 2016. Flipkart, which took longer than expected to raise new capital, had gone slow on its monthly spends on discounting and promotions, bringing its burn down to about $30-40 million per month, even as Amazon's onslaught continued.

Over the past two months, however, Amazon's monthly spends on discounts and promotions is around $80 million (over Rs 500 crore) per month, while Flipkart is believed to have upped the ante in the run-up to the sale season.

Last year, Flipkart took a dig at Amazon as the Seattle-based e-tailer focused on selling daily consumables and household products.

This year, Flipkart, too, is looking to push categories with pilots in grocery business along with segments like daily consumables, furniture and its private labels, including the recently-launched Billion brand.

“With every festive season, Flipkart has expanded the e-commerce horizon in India, bringing to existing and new customers the widest product range at best prices. This year is going to be even more delightful for customers, because along with existing affordability programmes, we're making new additions like extended warranties and buyback guarantee,“ said Smrithi Ravichandran, senior director, category design organisation, Flipkart.

As reported by TOI, Flipkart plans to offer EMIs on debit cards this year along with a slew of consumer financing programmes to boost sales of high value items. Amazon, too, has similar financing and exchange programmes, along with a significant chunk of money going to build infrast ructure for faster deliveries for Prime members. “Since the launch of Prime, the company has been pushing the product at a cheap rate of Rs 499 per annum. It is hoping to get the dividends this year during the festive season as Prime subscribers typically buy more than non-Prime subscribers,“ a person aware of Amazon's plans said. So far, out of every three orders placed on Amazon India, one is by a Prime subscriber.

When contacted, a spokesperson for Amazon declined to comment on the story.

Gross sales or GMV is overall sales on an online marketplace, excluding discounts and returns, out of which e-tailers take a share ranging from 5-15% as their margin. To be sure, both Amazon and Flipkart were expected to clock about Rs 12,000 crore of sales last festive season but they fell short of it. Industry analysts hope that will not happen this year with the sale being funded by the deep pockets of Amazon's cash reserves and Flipkart investors.

“A divorce could reshape the global wealth ranking. If the couple split their fortune equally, it could leave wife MacKenzie with $69 billion, making her world’s richest woman. It could also make Microsoft's Bill Gates the planet’s richest person once again,” reported Bloomberg. Amazon founder Bezos was dating Lauren Sanchez, a 49-year-old ex-news anchor.